More than 300 sellers were sued! This category was swept away

Sellers complained: "When the market is bad, all kinds of monsters and demons come out."

Nowadays, "floor spirals", "malicious bad reviews" and "malicious order-placing" are considered mild for sellers. Now, in order to sell their unsaleable products, some people directly use the killer weapon, that is, the "infringement complaints" that sellers fear the most.

Last winter was a warm one, which resulted in unsale of winter products for many cross-border e-commerce sellers. In order to clear the inventory, some people started to have evil ideas and asked their competitors to stop selling by filing infringement complaints, so as to free up the market for them.

Recently, an Amazon seller approached Een.com and revealed that his category had been maliciously attacked by his peers. More than 300 sellers were sued, all of his product links were removed from the shelves, his account funds were frozen, and all the goods were "dead" in the warehouse.

The prankster is without exception one of our own. It is not uncommon in the cross-border circle for Chinese people to register trademarks, patents, and then file complaints against other sellers for infringement. Every time such incidents break out, a large number of sellers will be "injured". Because it is profitable, foreign law firms have even launched a special cooperation model.

As for Amazon, it will remove products from shelves once there is a complaint of infringement. This approach also gives unfair sellers and unscrupulous law firms an opportunity to take advantage.

Snow brush sellers were complained about, and links were removed from shelves on a large scale

At the end of last year, Chinese electric blankets, electric heaters and other heating equipment were snapped up by Europeans, which triggered a wave of winter product sales online. Many sellers increased their efforts to stock up, hoping to make a fortune in winter. However, what people did not expect was that the northern hemisphere had a "warm winter" last year, with abnormally warm temperatures, so sellers selling winter products suffered a tragedy.

Faced with a large amount of accumulated inventory, sellers can only deal with it at a low price through various means, but some people refuse to follow the right path and rack their brains to adopt improper means to clear the way for their products and achieve their sales goals.

One day, the seller mentioned above found that the two snow brush links he was selling were suddenly removed from the shelves because he was complained of infringement of appearance patents. Since it was the best season for winter product sales, the removal of the links had a great impact on him, so he immediately contacted the other party to solve the problem.

At first, the seller received no response to his multiple email communications. Later, after some twists and turns, he contacted the other party's attorney in the United States. However, the answer he got made him furious: "They clearly said that last year's warm winter made winter products unsalable, and they were clearing out the categories for their big customers by eliminating non-cooperative competitors."

Not only that, after obtaining the other party's patent documents, through comparison, the seller found that his product was obviously different from the patented product in many aspects, and the sales time was earlier than the other party's patent was issued. "We started selling on Amazon in 2019, but their patent was not issued until 2022, and many parts of this product were customized by us," the seller complained: "Who copied whom!"

The seller, unwilling to be cheated, decided to hire a lawyer to sue the other party. However, during the process of communicating with the lawyer, he gave up the idea of ​​suing and turned to the other party for settlement. The reason why the seller chose to swallow this loss is the same as many sellers with similar experiences. On the one hand, the lawyer fees are very expensive, and on the other hand, he can't afford it.

If they choose to sue, they will need to pay $100,000 in attorney fees. In the past, high attorney fees often discouraged other sellers from responding to the lawsuit, because the money frozen in the account may not be as high as the attorney fees. In addition, cross-border cases take a very long time, usually six months to a year to resolve, and the time cost of responding to the lawsuit is very high.

Not only that, during this process, other links of the seller's account are still selling normally, but the account is frozen again, and the money cannot be withdrawn, which means that the more you sell, the more you freeze. Moreover, this product only accounts for a small part of the entire product line of the seller's account (store). If the stalemate continues, the loss will be very large.

In addition, seasonal products have a fatal weakness: they are useless after the season ends. The life cycle of a snow brush is only the whole winter. After winter, it will be eliminated by the market, resulting in inventory backlog. If it is kept until the winter of the following year, the high storage fees will put pressure on the seller to breathe. "This is also the reason why this series of products has been maliciously complained about intellectual property rights by several other companies." The seller who broke the news said helplessly.

Because of these reasons, he had no choice but to settle the matter by paying compensation. According to the agreement between the two parties, they could continue to sell on Amazon, but the other party's attorney played the "disappearing trick" after receiving the money and could not be contacted. Faced with this situation, the seller was helpless: "Before disappearing, he just withdrew the lawsuit from the court, but did not write a withdrawal email to Amazon."

In the end, all the goods in the two links of the seller "died" in the warehouse. Because they were winter products, they had to be stored for a year, and the storage fee was a huge sum of money, which even exceeded the value of the goods.

It is understood that there are more than 300 sellers who have been complained about, of which more than 80 are Amazon sellers. "The total value of the goods of these Amazon sellers is millions, and it will be a more serious problem if their accounts are blocked together." The whistleblower said.

"I've only seen this kind of thing in news reports before, but I didn't expect it to actually happen to me this time." The seller pointed out that foreign consumption is weak and the economy is in a downturn, so many unscrupulous and shameless operations have emerged. He is very disgusted with this unscrupulous and malicious competition method.

What infuriated him the most was that the perpetrators were “our own people”. “The rights holder is a company in Ningbo. Isn’t this just taking the money from domestic sellers to increase the revenue of foreign law firms?”

Chinese people colluded with foreign law firms to defraud their peers, and the profit-sharing method was determined

For sellers, infringement complaints are never a trivial matter, and many people even have no choice but to close their businesses.

A seller once said when sharing his entrepreneurial experience that he started working in 2020 and worked hard for two years. The team finally expanded from 2 people to 16 people. At its peak, the annual revenue reached more than 20 million. However, because of infringement, the two main accounts were blocked and the funds were withheld. Eventually, the company had no working capital, all the employees resigned and left, and it was back to the starting point.

In recent years, as the rules have been continuously refined and standardized, Amazon has gradually strengthened its crackdown on infringing products. Therefore, whenever the issue of "infringement" is mentioned, sellers are always terrified, fearing that they will also fall into the trap. Because there are so many traps, there are only trademark infringements, patent infringements and copyright infringements, not to mention that there are also unscrupulous sellers who set traps specifically for fraud.

Amazon Wuye has twice revealed that a large number of sellers were maliciously complained by domestic companies for trademark infringement, and his products were also on the list, so these sellers were stopped from selling because of "counterfeiting". The two malicious complainants achieved the purpose of the complaint by "tampering with the listing", that is, by grabbing the editing rights and adding their already applied trademarks to the relevant descriptions of the sellers' listings. The two infringing word trademarks were "closhion" and "OIMG" respectively.

Another similar operation is to register a trademark or common word and then file an infringement complaint.

Sellers hate this practice of "creating conditions" to allow others to infringe even though there is no infringement . The ultimate goal of those who maliciously complain about infringement is often to get the settlement money. Some even take advantage of Amazon's "better to kill the innocent than to let the guilty go" attitude and work with foreign law firms to make crazy complaints against sellers who sell normally.

The whistleblower mentioned above said that after they received the complaint, they tried to contact several law firms in the United States and asked whether there was a cooperative model for using patent complaints to remove other people's products from the shelves. The other party gave an affirmative answer and also listed a detailed profit-sharing method.

Because of this, many law firms in the United States have been fattened by sellers, among which GBC is the most famous in the cross-border circle. In 2022, it filed at least 243 trademark-related lawsuits, further driving its annual revenue to nearly $1 billion (the average exchange rate of the RMB to the US dollar in 2020 was 6.8974, or about 6.897 billion yuan). Many big sellers may not be able to earn this much revenue even if they work hard to sell goods for a year, because even a super seller like Anker Innovations only had a revenue of 9.4 billion yuan in 2020.

It is reported that the settlement fee collected by GBC generally accounts for 50% to 90% of the seller’s frozen balance. The settlement fee deducted from the seller’s account is ultimately divided between the law firm and the plaintiff (rights holder).

A seller who had been complained about copyright infringement cried out that he had only sold one item, but the law firm representing the copyright holder offered a settlement of $5,000. The law firm sued hundreds of sellers at once, so you can imagine how much it could get from it.

Not only GBC, but most law firms also collect settlement money by deducting it from the frozen account balance in proportion. Even if the product that was complained of infringement only sold for $1,000 in total, the settlement amount could be as high as $20,000. For example, a seller only sold a product for $1,000, but had $20,000 in his account. If he paid 90% of the account balance, he would have to pay $18,000. In addition, he also had to pay a handling fee, which almost emptied the seller's account in the end. Sometimes the settlement money is even more than the money that was frozen in the account.

Sellers are like lambs to be slaughtered, and the law firms that often sharpen their knives against sellers are usually the following: GBC, KEITH, EPS, SMG, AMS, HSP, DAVID. Many sellers have encountered their "phishing" and malicious lawsuits. These law firms are very fast in collecting and freezing evidence. Generally, they will first use crawler technology to search for evidence of seller infringement on online channels such as Amazon, eBay, and independent websites. Once they find that infringing products are being sold, they will pretend to place orders to obtain corresponding transaction information as evidence for their lawsuits.

"It is precisely because Chinese people like to make pranks that foreigners are watching them covetously!" the seller who broke the news denounced.

A survey conducted by Ennet previously showed that more than 70% ( 72%) of sellers said they had encountered "fishing enforcement" by foreign law firms, which is a shocking number. When encountering infringement complaints, 50% (48%) of sellers choose to pay the settlement fee and settle out of court.

The most infuriating thing is that seeing that foreign law firms are making a lot of money, Chinese people have also set their eyes on this piece of "fat meat" and set up law firms in the United States and other countries to specifically sue Chinese sellers.

Seller: Response to the lawsuit, even if it is only to win justice

In the face of infringement complaints, if you want to avoid pitfalls, you must ultimately go back to the source, that is, do not infringe. So how do you avoid infringement?

1. When choosing a supplier, you must ensure the legitimacy of the channel and avoid selling counterfeit and imitation brands. If the supplier's product has a trademark but it is not the owner, you must obtain brand authorization from the trademark owner.

2. Before putting the product on the shelves for sale, be sure to check with the foreign patent and trademark office whether there are any infringement issues or hidden dangers;

3. When posting a listing, pictures and videos must be original. When editing the text description of the listing, be sure to avoid sensitive words, such as brand names and common words that have been registered as trademarks;

4. Information about infringement changes very quickly, so you should always do a good job of self-inspection;

5. Attack is better than defense. Strengthen brand and patent awareness, and do a good job in trademark and patent registration for products on sale.

Foreign countries have always attached great importance to intellectual property rights, especially the United States. Once caught, it is difficult to get away with it. Since the seller is doing cross-border business, it is more troublesome to deal with infringement lawsuits. Therefore, avoiding it in advance can save a lot of trouble.

However, if a seller is unfortunately complained of infringement, there is no need to be too afraid. If you are sure that you have not infringed, or the other party has no definite evidence of infringement, do not blindly choose to settle. Many rogue law firms and pranksters have seized on the sellers' mentality of "making a big deal out of a small deal" and gradually become arrogant. In fact, the more you compromise, the more unscrupulous they will be.

In fact, many sellers who choose to settle have not thought about responding to the lawsuit, but they lack relevant legal knowledge and support from professionals. According to a survey conducted by En.com, the reasons why sellers choose to settle are that most people ( 56%) think the cost of responding to the lawsuit is too high, and nearly half (44%) of them choose to settle because they cannot find professional legal professionals to help them and lack understanding of local laws and judicial procedures.

With the continuous development of the cross-border e-commerce industry, many domestic law firms have opened up businesses specifically for cross-border e-commerce infringement complaints. Sellers can find a professional law firm to handle it. However, sellers need to be aware that some bad law firms or lawyers will recommend sellers to settle in order to get money as soon as possible and save some trouble. Therefore, you should be careful in selecting lawyers and law firms, do background checks, and also find several lawyers from different law firms for consultation.

Generally speaking, after the settlement, the plaintiff's law firm and the "settlement lawyer" will transfer almost all the money in the defendant seller's account, but can only save the seller from losing the case and bearing civil consequences such as compensation.

Speaking of sellers’ responses, we have to mention that on January 15, 2020, Chinese sellers defeated the “phishing law firm” GBC for the first time. This case made sellers understand two things:

First, overseas rogue law firms are not indestructible and cannot be defeated; second, the difficult situation of today's rogue law firms is partly the result of years of connivance. For example, in the United States, it is simple to file a case, and there are many loopholes in the litigation rules. That is, as long as the defendant does not appear, the plaintiff can almost hold the pen of the judge to draft the judgment and all sanctions against the defendant.

Just like the above case, because the defendant's seat was always vacant and no one responded to the lawsuit, the judge of the Northern District Court of Illinois had no chance to open the case file and take a look at such cases, and of course had no way of knowing the rogue operations of GBC and other black law firms. In the United States, it is very difficult for plaintiffs to win a case and get a penny, but it is much easier if the target of the lawsuit is a Chinese seller. In the face of huge profits, do you think those law firms will not rush to it?

Since then, the situation in which sellers choose to settle as soon as possible when faced with infringement complaints has been reversed to a certain extent, and more people have chosen to respond. They said that they are willing to pay the time and money costs, even if they only win justice in the end.

Amazon is not soft on copyright infringement as crackdown gradually intensifies

As mentioned in the previous article, Amazon's methods of dealing with infringements are generally quite severe. At the very least, they will remove product links, and at the most, they will directly block the account (store). The reason why Amazon imposes such heavy penalties is, on the one hand, to maintain its brand image and not let the outside world think that it is a platform for selling counterfeit goods. On the other hand, it is afraid that brands will think that it is condoning the sale of counterfeit goods and be sued.

Foreign media reported in early 2022 that the Israeli brand Maglula sued Amazon for selling counterfeit products by third-party sellers. The court eventually ruled that the company's case against Amazon was a "clear case of counterfeiting."

Although Amazon claimed that it should not be held responsible for infringing Maglula's intellectual property rights and that the platform was only providing services to other sellers, the court still approved multiple inspections of Amazon warehouses and made the above ruling despite Amazon's strong opposition.

After this case, Amazon has tightened its scrutiny on counterfeit products. In November 2022, Amazon struck hard and cooperated with Chinese law enforcement agencies to destroy three counterfeiting dens. The case seized more than 240,000 counterfeit goods, semi-finished products and counterfeit brand logos, involving well-known brands in different industries such as luxury goods, sportswear and auto parts. The people involved in the case were detained and the product-related listings were removed from the shelves.

It is reported that in 2021, Amazon blocked more than 2.5 million abnormal seller account registrations worldwide and captured and processed more than 3 million counterfeit goods.

Of course, Amazon also makes misjudgments sometimes, but due to pressure from the platform and considerations of continuing to sell on the platform in the future, many sellers dare not confront Amazon head-on, but there are always exceptions.

Previously, Amazon suspected a seller of selling counterfeit electronic products, so it froze his account, confiscated tens of thousands of dollars in the account, and seized tens of thousands of products stored in the seller's warehouse. The seller objected to Amazon's handling and asked for the return of his funds and products, but Amazon ignored him, so he finally filed a lawsuit in court. 18 months later, the seller won the case and won $775,000 in compensation with a lawsuit fee of $200,000.

A report released by the U.S. House of Representatives Judiciary Committee last year showed that only 163 of the millions of merchants selling on the Amazon platform filed arbitration proceedings against Amazon between 2014 and 2019. The victorious seller set an example for other sellers.

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